ADAMS BANK & TRUST Your Financial Services Center

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1 ADAMS BANK & TRUST Your Financial Services Center 2 nd Quarter 2007 Nebraska Brule Chappell Grant Imperial Indianola Lodgepole Madrid North Platte Ogallala Sutherland Colorado Berthoud Colorado Springs Firestone Corporate Toll-Free Telebanc Toll-Free in Ogallala info@abtbank.com World Wide Web Myths and Facts about Social Security Whether you are 23 and just beginning your career, 43 and in the middle of your work life, or 63 and getting ready to retire, you should take Social Security into account when doing your financial planning. To help you get a better understanding of how Social Security can fit into your financial plans, here are three common misconceptions about Social Security, accompanied by the real facts. Myth #1: Social Security will provide most of the income I will need during retirement. Fact: Social Security provides a smaller portion of retirement income than many people expect. Presently, on average, Social Security makes up about 39% of a retiree s income. The balance comes from earnings during retirement (26%), pensions (20%), personal savings and investments (13%), and other sources (2%). This means that at today s benefit levels, you still need significant income from retirement plans, savings and investments to maintain a desired standard of living during retirement. The truth is, Social Security was never meant to be the sole source of income for retirees. As President Eisenhower said over half a century ago: The system is not intended as a substitute for private savings, pension plans and insurance protection. It is, rather, intended as the foundation upon which these other forms of protection can be soundly built. Actually, it may be unwise to expect that Social Security will provide even 39% of your own retirement income. To keep the Social Security system solvent, its benefit structure will have to be changed in future years. Though we don t know exactly how and how much the benefit structure will change, we do know that the younger you are now, the more likely it is that your ultimate benefits will be affected in a significant way. Myth #2: If I earn money after I retire, I will lose my Social Security benefit. Fact: Money you earn after you retire will affect your Social Security benefit only if (and while) you are still under your full retirement age. You can start receiving Social Security benefits before your reach your full retirement age as early as age 62, in fact but your benefits will be at a reduced level for the duration of your entire retirement. If you do retire early but continue to work and earn more than a certain annual limit during those early retirement years, your Social Security benefit will be reduced by $1 for every $2 over the limit that you earn. (For 2007 the annual earnings limit is $12,960.) Once you reach your full retirement age, however, there is no limit on the amount you can earn. You could, in fact, be employed full time with no further reduction in your Social Security benefit. What is your Full Retirement Age? If you were born in: Your full retirement age is: and 8 months and 10 months and 2 months and 4 months and 6 months and 8 months and 10 months 1960 or later 67 Myth #3: Social Security benefits are not subject to income tax. Fact: Your Social Security benefits may be treated as income for income tax purposes if you have other income above certain limits. Continued on page 2.

2 Myths and Facts about Social Security Continued Continued from page 1. If your only income is from Social Security, then your benefits are not taxable. However, if your total retirement income includes earnings from employment or self-employment, investment earnings or interest on savings, a portion of your Social Security benefits may be considered taxable income. You can find more detailed information about these and other facts online at this Social Security website: Whatever your age, be it 23 or 63 or in between, it is never too soon to start planning for a comfortable retirement income. If you are ready to explore your retirement account and investment options, to make sure you wind up with enough extra to supplement Social Security, we can help. Just call any Adams Bank office and ask for an appointment with an Adams Bank & Trust financial services representative. It s a great first step to a good retirement. Todd Adams, Chief Executive Officer Better Values for Our Personal Checking Customers by Michelle Kalin Retail/Marketing Manager As a bank that truly values our customer relationships, we are always on the lookout for the banking equivalent of a better mousetrap something that adds value, convenience and/or extra service to our product offerings. For our personal checking account customers, we have found that better mousetrap. Beginning June 4, our personal checking account lineup has been revamped to provide greater convenience and better value. In early May our checking customers received letters describing how the features of their checking accounts have changed for the better. The box at the right gives a quick overview of the new accounts and their benefits. What makes them better? One of the exciting changes is found in the area of the Bonus Benefits. Our new benefits supplier has developed a better, more convenient method for obtaining discounts. Their new coupon system is Personal Checking Account Benefit Groupings Basic Benefits: Check images with statements Free Online Banking and Internet Bill Pay Free VISA Check Card. Bonus Benefits: Free branded checks Payment card and personal identity protection; Emergency Travel Assistance Travel accidental death insurance Local and national dining savings Local and online shopping discounts Local service discounts Travel, Hotel and Recreation discounts. Preferred Benefits: Increased insurance coverage Pharmacy, vision and hearing savings. Personal Checking Account Descriptions Gold Checking: Basic, Bonus and Preferred Benefits. Monthly membership fee of $6. No minimum balance, no per check charges. Ultimate Free Checking: Basic Benefits. No monthly maintenance fee, no minimum balance, no per check charges. Bonus Benefits can be added for $4 per month. Interest Checking: Basic Benefits. Monthly maintenance fee of $10 (does not apply when minimum balance of $1,000 is maintained); no per check charges. Bonus Benefits can be added for $4 per month. Platinum 50: Basic and Bonus Benefits. Monthly maintenance fee of $8 (does not apply when minimum balance of $250 is maintained). Platinum 50 Plus: Basic, Bonus and Preferred Benefits (including extra insurance). Monthly membership fee of $4. No minimum balance; no per check charges. accessed through the Internet. When you are looking for a place to dine or shop, whether it is local or while traveling, you go to our website and look up the participating establishments. When you find one you like, simply print off the coupon and you re ready to go. You print the coupons as you are ready to use them, so you don t have to keep a special coupon file. In addition this is my favorite feature you get to recommend which businesses you want to see offering discounts. If one of your favorite businesses isn t yet participating, you submit the business name on the website and our benefit supplier will contact the business to see if it would like to begin offering a special discount. Continued on back page. 2

3 We d Like You To Meet: Stella Larreau Senior Personal Banker North Platte 3 Smart things to do now to make your financial life easier or more rewarding Take advantage of the special 17-month CD coupon shown below. Start, or continue, contributing to an Individual Retirement Arrangement. Stella Larreau is a senior personal banker at the Adams Bank & Trust North Platte office. As a personal banker, she opens all types of deposit accounts for customers and also processes and approves consumer loans. Though Stella has been with Adams Bank for just over a year, she has more than two decades of banking experience. Before coming here I worked for 18 years at the North Platte bank that is now Wells Fargo, Stella noted. I decided to join Adams Bank because of the great working atmosphere. It s family-owned, smaller and more focused on the people aspects of the business. The part of her job that Stella likes most is the customer contact and the ability to actually get to know a little about the people she helps. We try hard to match the right account with each customer s needs, Stella said. To do that we have to find out about the customer s goals, likes, dislikes about certain types of accounts and so on. Along the way we get a sense of who our customers are as people and what s important to them. I really enjoy that part of my job. A native Texan, Stella was born in the small town of Dilley, about halfway between Loredo and San Antonio. Her father was a migrant worker who regularly did seasonal work Kuroki Farms in Hershey and Madrid Nebraska. When Stella was seven, her family moved to Hershey after her father was offered a full-time postion with the Kuroki operation. When asked why she has no trace of a Texas Continued on back page. Consider laddering your certificate maturities to increase the average return on all deposits. Visit the website and order your free credit report. Clip & Earn Coupon Expires 8/31/07 ADAMS BANK & TRUST 5.25 % APY 17-Month Certificate of Deposit $10,000 Minimum Deposit Available through August 31, 2007 This special 17-month CD has interest compounded quarterly, producing a 5.25% ANNUAL PERCENTAGE YIELD. Penalty for early withdrawal. Member FDIC. 3

4 Stella Larreau Continued from page 3. accent, Stella said she never learned Texan because Spanish was her only language for the first six years of her life. I didn t learn English at all until I entered a Head Start program when I was six. After graduating from Hershey High School in 1972, Stella began her banking career in Lincoln, Nebraska with the NBC bank.. Stella and her husband, Brent, jointly run Rodeo Rose Productions, a turnkey rodeo production company complete with portable arena and necessary livestock. Their interest in rodeos has carried over to their son, Lane, who does bareback riding and steer wrestling in high school rodeos. Last year he made it to the national finals in Springfield, Illinois, Stella proudly noted. Stella has two grown daughters, Marci and Kandi, and (so far) one grandchild, Sam. In the summer Stella s spare time is taken up with rodeos (of course), gardening and a little fishing. In the winter, she gets to spend more time with Sam. Stella is a member of Our Lady of Guadeloupe Catholic Church in Hershey and she also is an active member in the Miss Rodeo Nebraska Association. Better Checking Values Continued from page 2. Something for everyone If you are a bargain lover, I recommend Gold Checking (or Platinum 50 Plus for people age 50 and better). These accounts offer our best total value. On the other hand, if you want just the basics, our Ultimate Free Checking is the account for you. Or, if you typically maintain a higher checking balance, Interest Checking may prove a profitable choice. Whatever your interest is, we invite you to stop in an learn the details about the benefits included in our new checking account lineup. Remember the old fast food slogan: Have it your way. That s the way we ve designed our checking accounts so you can get the features and benefits that are important to you. Adams Bank & Trust Balance Sheet as of March 31, 2007 Cash $6,447,574 Cash in our vault, plus cash due on demand from other banks where funds are deposited.. Government and Agency Bonds 58,651,752 Marketable investments in bonds and other securities of the U.S. Government and its agencies. Federal Funds Sold 0 Funds loaned to other banks for daily cash needs payable on demand. Loans and Leases 346,715,232 Total of all money loaned to customers for all types of loans, such as agriculture, commercial and consumer. Buildings, Furniture and Fixtures 15,915,320 Book value, after depreciation, of buildings, computers, equipment, etc. Other Assets 10,578,420 Interest on loans earned but not collected, expenses that have been prepaid, etc. Total Assets $438,308,298 Deposits $304,263,035 Money on deposit by customers of the bank in the form of checking accounts, savings accounts and certificates of deposit. Other Liabilities 94,064,254 Borrowings by the bank, interest on deposits that has accrued, payable at a future date, other expenses accrued but not yet paid, deferred taxes, etc. Capital 3,000,000 Par value of the investment of the stockholders for the purchase of stock. Surplus 12,863,288 Additional money contributed by stockholders to provide extra financial strength. Undivided Profits and Reserves 24,117,721 Bank earnings left in the bank to provide added strength to meet possible future losses on loans and to replace buildings & equipment as they wear out. Total Capital Accounts 39,981,009 Total capital available for the safe operation of Adams Bank & Trust. Total Liabilities & Capital Accounts $438,308,298 PRSRT STD U.S. Postage P A I D Lincoln, NE Permit No. 592 P.O. Box 720 Ogallala, NE Member FDIC ADAMS BANK & TRUST EQUAL HOUSING LENDER World Wide Web: info@abtbank.com Adams Bank & Trust Internet addresses:

5 2 nd Quarter 2007 ADAMS BANK & TRUST W e a l t h M a n a g e m e n t At the End of the Day By Jim Prange and Stephen Zamborelli Many Americans who planned to retire within the next five to ten years are unhappy to find that their long-term savings, their next egg, falls short of what is needed to retire when and as comfortably as planned. They are finding that their next egg is not sufficient to secure a steady stream of income during their retirement years. And women are especially vulnerable. According to a recent GE Center for Financial Leaning, most respondents underestimated the life expectancy of a 65-year-old today by five years or more. In fact, only 11% of those surveyed knew what the average 65-year-old today has a life expectancy over 85 years of age. However, women tend to live longer than the average. The Administration on Aging reports that in 2004, women accounted for nearly 60 percent of the population age 60 and older. In fact, because women tend to outlive their husbands, women are less likely to be able to stay at home and so are twice as likely as men to end up in a nursing home. Therefore, it is especially important for women to make up for lost savings time. Fortunately, it s easier than you might think. Simply make your retirement your priority. Throughout their lives, women make sacrifices for their husband, their children, and their elderly relatives. By making your retirement saving accounts your priority now, as your planned retirement date draws near, you can make up for lost time. To start with, if you do not already have one, establish an IRA. Even if you are a non-working spouse, you can deposit up to $4,000 (for 2007) a year into an IRA, plus an additional $1,000 (for 2007) if you are age 50 or over. While the tax-deferred compounding of the IRA may have a powerful impact on the growth rate of your savings, you many need to increase your savings in other ways also. For example, if you are still working, you can contribute at least enough to a 401(k) plan, if it is available, to earn the maximum employer match allowed by the plan. Additionally, many employer retirement plans allow workers over age 50 to contribute an extra $5,000 (for 2007) above what younger workers are permitted to contribute. Making up for lost time through increased savings can be done. And, it might be less painful than you would imagine. Consider Kathy who is fifty years old and plans to retire at 60. Kathy wants to increase her savings level but knows that her ability to change her income is limited. On the other hand, her ability to change her expenses is totally at her discretion. So Kathy decides to take two simple steps. First, instead of making her morning coffee at home or buying it on her way to work, Kathy is saving money by simply waiting until she arrives at work Continued overleaf. Securities offered exclusively through Raymond James Financial Services, Inc. (an independent broker/dealer, member NASD/SIPC), are NOT FDIC Insured NOT GUARANTEED by Adams Bank & Trust Subject to risk and may lose value.

6 At the End of the Day Continued and drinking coffee provided by her employer. By doing this Kathy is able to save approximately $7 a week and she contributes that savings to her IRA. Over the next ten years, Kathy can painlessly save a total of $3,640 which, assuming What could be more comforting than a dependable, consistent paycheck in retirement? You can give yourself the opportunity to enjoy an attractive retirement income stream, month after month. But, planning to optimize your retirement income stream is just as critical as planning to accumulate your retirement nest egg. Here are some steps you can take to help you plan to optimize your retirement paycheck. 1. Identify the source(s) of your retirement paycheck. You will most likely receive income from several sources including Social Security, a pension or 401(k), an IRA, a taxable investment account or annuity. 2. Carefully time your first retirement paycheck. It may result in a larger paycheck. And, you may be able to retire sooner than you think. For example, the recent decline in interest rates has triggered a significant increase in the lump sum retirement benefit for many pension and defined benefit plan participants. 3. Estimate the size of retirement paycheck you will need. It is important to do some cash-flow projections. These will allow you to match the size of your retirement it grows at an average of 5.5% a year, would grow to $4,860 by the time Kathy is ready to retire. Kathy has also decided that instead of eating in restaurants as often, she will eat Planning Your Retirement Paycheck paycheck to your expenses. It also helps determine the frequency with which you should take your retirement paycheck, such as monthly or quarterly. 4. Pinpoint how much you can afford to pay yourself. The goal here is to pace your paychecks to avoid running short of money during retirement. Experts do not agree on one safe withdrawal rate. However they do agree that your annual withdrawal rate generally should not exceed your average annual earnings rate. 5. Target the initial Asset Allocation you should maintain in retirement. The factors discussed above, such as the source of your retirement paycheck, and your cashflow requirements will influence your initial asset allocation. A general recommendation is to hold three to four years worth of retirement paychecks in cash and cash equivalents. 6. Determine whether to draw your paycheck from taxable accounts, tax-deferred accounts or a mix of both. The rule of thumb is to spend down your taxable accounts first. This permits your tax-deferred accounts to continue their tax-deferred or tax-free (as with Roth IRAs) growth. one less dinner out each week. Assuming she would have spent an average of $20 for each of those restaurant meals, Kathy is able to save an additional $10,400 before she reaches age 60, her planned retirement age. Again assuming an average growth rate of 5.5% a year, these savings will have grown to $13,888. By doing these two simply things, Kathy will have painlessly increased her retirement nest egg by $18,748 and will retire more comfortable, more happily. At the end of the day, as Aristotle said, our happiness depends on ourselves. There is still time to increase your retirement nest egg to an amount that will be sufficient for you to retire when and as you originally planned. By doing just one or t wo si mply t h i ngs, you ca n significantly increase your savings, too. Your financial advisor can show you how painless it can be to make your retirement dreams happier. Please note, changes in tax and estate planning laws may occur at any time and could have a substantial impact upon each person s situation. While we are familiar with the tax and estate planning provisions of the issues presented herein, as Financial Advisors of RJFS we are not qualified to render advice on tax or legal matters. You should discuss any tax or legal matters with the appropriate professional. The information has been obtained from sources we consider to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Stephen Zamborelli and Jim Prange and not necessarily those of RJFS or Raymond James. Expressions of opinion are as of this date and are subject to change without notice. For assistance in reviewing your investment plan (or in creating one), please call any Adams Bank & Trust office for an appointment with a Raymond James Investment Representative. All Nebraska offices and Northern Colorado are served by Jan Acker, Chad Adams and Jim Prange located at Adams Bank & Trust, 315 N. Spruce, Ogallala, NE or (toll-free). In Colorado Springs, see Stephen A. Zamborelli 1310 Garden of the Gods Road Colorado Springs, CO